The entry to record the disposal of a worn out machine with cost of $8,000 and accumulated depreciation of $7,200 includes a debit of $800 to the Loss on Disposal account.

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When a machine is disposed of, its book value (cost minus accumulated depreciation) is compared to the amount received from its sale or salvage value. If the book value is greater than the sale/salvage value, it results in a loss on disposal that needs to be recorded. The loss on disposal is calculated as the difference between the book value and the sale/salvage value. In this case, the book value of the machine is $800 (=$8,000 cost - $7,200 accumulated depreciation), which means that if the machine is sold for less than $800, a loss on disposal will occur. Therefore, the entry to record the disposal of the machine would include a debit of $800 to the Loss on Disposal account (which is an expense account) to reflect the loss. The corresponding credit would go to the Accumulated Depreciation account (to remove the balance related to the machine) and the cost of the machine account (to remove its value from the books).

The Entry to Record the Disposal of a Worn Out